3.3.2 Prospects for the livestock sector

Slower growth in world meat consumption. The forces that shaped the rapid growth of meat demand in the past are expected to weaken considerably in the future. Slower population growth compared with the past is an important factor. Perhaps more important is the natural deceleration of growth because fairly high consumption levels have already been attained in the few major countries that dominated past increases. As noted, China went from 10 kg in the mid-1970s to 45 kg currently, according to its statistics. If it were to continue at the same rate, it would soon surpass the industrial countries in per capita consumption of meat, an unreasonable prospect given that China will still be a middle-income country with significant parts of its population rural and in the low-income category for some time to come.23 These characteristics suggest that further growth leading to about 60 kg in 2015 and 69 kg in 2030 as a national average for China is a more reasonable prospect than the much higher levels that would result from a quasi continuation of past trends (see also Alexandratos, 1997).24 As another example and for similar reasons, Brazil's current average meat consumption of 71 kg suggests that the scope for the rapid increases of the past to continue unabated through the coming decades is rather limited.

The next question is whether any new major developing countries with present low meat consumption will emerge as major growth poles in the world meat economy.

The countries of South Asia come readily to mind. India has the potential to dominate developments in this region and indeed the world as a whole. It should be recalled that India is expected to rival China in population size by 2030 (1.41 billion versus 1.46 billion) and indeed surpass it ten years later, reaching 1.5 billion by 2040. It is also recalled that South Asia's projected growth rate of GDP per capita (overwhelmingly reflecting that for India) is, in the latest World Bank assessment, a respectable 3.5 percent p.a. for 2000-2004 and 4.0 percent p.a. after that until 2015. These rates are higher than those achieved in the 1990s (World Bank, 2001c, Table 1.7). India's meat consumption is very low - currently 4.5 kg per capita - and it has grown by only 1 kg in the last 20 years.

Can India play the role China has had so far in raising world meat demand? On this point, there are widely differing views. The first viewpoint, downplaying this prospect (Mohanty, Alexandratos and Bruinsma, 1998), is essentially based on the analysis of the differences in meat consumption among different income groups of Indian society. They show that high-income Indians, whether urban or rural, do not consume significantly more meat than low-income ones, although the differences in milk consumption are wide. Tomorrow's middle- and high-income population groups are likely to behave in a similar fashion. This would seem to preclude significant increases in national meat consumption because of income growth. Some support for this view is provided by recent marketing studies indicating that traditional consumption habits in Indian society are more resistant to change than one would expect from macroeconomic indicators (Luce, 2002). Other studies disagree, pointing to changing tastes and the prospect that the rapidly emerging middle classes will tend to adopt diets with higher meat content. For example, Bhalla, Hazell and Kerr (1999, Table 3) use«best guess» higher demand elasticities and project per capita food consumption of meat and eggs to increase from 5.8 kg in 1993 to 15 kg in 2020, in a scenario with 3.7 percent p.a. growth of per capita income. The latest IFPRI study of global food projections expects per capita meat consumption of 7.4 kg in 2020 (baseline scenario) or, in a rather improbable«India high-meat scenario», 18.0 kg (Rosegrant et al., 2001, Table 6.23). Yet another IFPRI study has 7.0 kg for India in 2020 (Delgado, Rosegrant and Meijer, 2001, Table 7).

The only generalization we can make with some confidence is that the recent high-growth rates of per capita consumption of poultry meat in India (admittedly from the very low base of 0.2 kg in the mid-1980s to 0.6 kg in 1997/99) is bound to continue unabated in the coming decades. That is, India's participation in the global upsurge of the poultry sector, being at its incipient stage, still has still a long way to go. Consumption of other meats will probably grow by much less, with beef and pork subject to cultural constraints for significant parts of the population of India and indeed the whole of South Asia. In parallel, consumption of the preferred mutton/goat meat faces production constraints, implying rising real relative prices compared with poultry meat. Overall, the force of the growth of poultry meat consumption has the potential of raising India's average consumption of all meat by 2 kg in the period to 2015 (compared with 1 kg in the preceding two decades) and by another 4 kg in the subsequent 15 years to 10 kg in 2030 (meat plus eggs: 15 kg). This kind of growth will perhaps be viewed as revolutionary in a national context, since it would raise the very low intake of animal protein in the structure of the country's diet. However, it will be far from having an impact on world averages and those of the developing countries anywhere near that exerted in the historical period by developments in China.

Other countries or regional groups that played a role in raising global consumption of meat in the past are those of East Asia other than China (mainland). Some countries in this group have attained mid- to high consumption per capita, e.g. Hong Kong SAR, Taiwan Province of China, Malaysia and the Republic of Korea. However, in the most populous country of the region, Indonesia, as well as in several others (Thailand, Malaysia, Korea, Rep., Taiwan Province of China) the process of rapid growth in meat consumption came to an abrupt end, often followed by reversals, in the late 1990s because of the economic crisis. The recent food crisis in the Democratic People's Republic of Korea accentuated the regional slowdown. A period of slow growth in the per capita consumption of this region (East Asia excluding China) may ensue before rapid growth resumes to reach the levels indicated in Table 3.10. This is an additional factor militating against the continuation of the rapid growth in world meat consumption at the high rates of the past.

Of the other regions, Latin America and the Caribbean, excluding Brazil, is still in a middling position as regards per capita consumption of meat (45 kg per capita), with only the traditional meat producers and exporters (Argentina and Uruguay) having levels comparable to those of the industrial countries. The swing to poultry consumption has been fairly strong, often substituting other meats. Per capita consumption of poultry meat is still at a middling level (17.2 kg, up from 9 kg in the mid-1980s), so the process still has some way to go. This will raise the group's overall meat average, as the decline in the consumption of beef, mutton and pork that characterized past developments is not likely to continue at past rates.

Average per capita consumption in the Near East and North Africa region grew little since the mid-1980s, in contrast with the sharp increases experienced in the preceding decade of the oil boom. The recent slowdown of the regional average reflected the sharp declines in Iraq, and the near stagnation of per capita consumption in several other countries. Most countries of the region are in a middling position as regards per capita consumption (in the range of 17-47 kg in 1997/99), although some of the smaller oil-rich countries (such as Kuwait and the United Arab Emirates) have fairly high levels. The three most populous countries of the region, Egypt, Turkey and the Islamic Republic of Iran (which between them have 53 percent of the region's population) are in the range of 20-22 kg. In this region there has also been a consumption trend towards poultry meat - in fact all growth in average meat consumption came from poultry - although the shift has not been as strong as in Latin America. The income growth prospects of the region for the next ten years are somewhat better than in the preceding ten years (see Figure 2.3). Therefore, some resumption of the growth in meat consumption, accompanied with further shifts towards poultry meat, may be expected.

Finally, sub-Saharan Africa's economic prospects suggest that little growth in its per capita consumption of meat is likely. There have been no improvements in the past 30 years, with per capita consumption stagnant at around 10 kg. Although some countries did increase consumption of poultry meat significantly (e.g. Gabon, Mauritius, Senegal and Swaziland), the region has hardly benefited from the options offered by the poultry sector - a situation that will probably persist for some time. For the longer term, the projections suggest only very modest gains.

Per capita meat consumption in the transition economies will eventually reverse its downward trend of the 1990s (having fallen from a peak of 73 kg in 1990 to 45 kg in 1999). However, at the projected level of 61 kg, it will not have reverted to the pre-reform levels even by 2030. In the industrial countries, average per capita consumption of meat at 88 kg is fairly high, although, as noted, countries with high fish consumption (Japan and Norway) have much lower levels. In principle, the achievement of near-saturation levels of overall food consumption, as well as concerns about health, suggest that there is very little scope for further increases. Yet the data indicate that such increases do take place even in countries that have passed the 100-kg mark, probably reflecting a mix of overconsumption and growing post-retail waste or feeding of pets. For example, the United States went from 112 to 123 kg in the last ten years (1989-99) and the latest FAPRI projections foresee an increase of 5 percent by 2011 (FAPRI, 2002). The USDA projections, however, foresee a slight decline (about 1 kg in retail weight) by 2011 (USDA, 2002, Table 22).25 Even in the more food quality/safety conscious EU, per capita consumption of meat is projected to continue growing, from 89 kg to 94 kg in the ten years 1998-2008 (European Commission, 2001, Table 1.19). These trends have to be taken into account, even if they make little sense from the standpoint of nutrition and health. In the projections for the industrial countries we have factored in rather more modest increases than the EU projections indicate: a 12 kg increase in per capita consumption for the entire 34-year period, raising it from 88 kg in 1997/99 to 100 kg in 2030. The whole of the increase will be in the poultry sector.

These prospects for changes in the per capita consumption of meat, in combination with slower population growth, suggest that the strength of the meat sector as a driving force of the world food economy will be much weaker than in the past. Thus, world aggregate demand for meat is projected to grow at 1.7 percent p.a. in the period to 2030, down from 2.9 percent in the preceding 30 years. The reduction is even more drastic for the developing countries, in which the growth rate of aggregate demand is reduced by half, from 5.3 to 2.4 percent. Much of this reduction is a result of the projected slower growth of aggregate consumption in China and, to a lesser extent, in Brazil. If these two countries are removed from the developing countries aggregate, there is very little reduction in the growth of aggregate demand for meat, from 3.8 percent p.a. in the preceding three decades to 3.1 percent p.a. in the next three. All this reduction reflects the slowdown in population growth from 2.0 p.a. to 1.3 percent p.a. (Table 3.11).

In conclusion, the projected slowdown in the world meat economy is based on the following assumptions: (i) relatively modest further increases in per capita consumption in the industrial countries; (ii) growth rates in per capita consumption in China and Brazil well below those of the past; (iii) persistence of relatively low levels of per capita consumption in India; and (iv) persistence of low incomes and poverty in many developing countries. If these assumptions are accepted, the projected slowdown follows inevitably. Naturally, a slower growth rate applied to a large base year world production (218 million tonnes in 1997/99, of which 116 million in the developing countries) will still produce large absolute increases (some 160 million tonnes by 2030, of which some 130 in the developing countries). These quantitative increases will accentuate environmental and other problems associated with such large livestock sectors (see Chapter 5).

No slowdown in the consumption of dairy products. The average dairy consumption of the developing countries is still very low (45 kg of all dairy products in liquid milk equivalent), compared with the average of 220 kg in the industrial countries. Few developing countries have per capita consumption exceeding 150 kg (Argentina, Uruguay and some pastoral countries in the Sudano-Sahelian zone of Africa). Among the most populous countries, only Pakistan has such a level. In South Asia, where milk and dairy products are preferred foods, India has only 64 kg and Bangladesh 14 kg. East Asia has only 10 kg. In this region, however, food consumption preferences do not favour milk and dairy products, but the potential for growth is still there with growing urbanization. Overall, therefore, there is considerable scope for further growth in consumption of milk and dairy products. The projections show higher world growth than in the recent past (Table 3.9) because of the cessation of declines and some recovery in the transition economies. Excluding these latter countries, world demand should grow at rates somewhat below those of the past but, given slower population growth, per capita consumption would grow more quickly than in the past.

Meat trade expansion will continue, some recovery in dairy trade. Despite the projected slowdown in meat demand growth, some of the forces that made for the buoyancy in the world meat trade in the recent past discussed above are likely to continue to operate - in particular the changes in trade policy regimes. The projected net trade positions are shown in Table 3.14. They reflect the above-mentioned factors making for growth in demand and the analysis of production possibilities, as well as the prospect that the more liberal trade policies of recent years will continue to prevail. Overall, the trend for the developing countries to become growing net importers of meat is set to continue. This is another important component of the broader trend for developing countries to turn from net exporters to growing net importers of food and agricultural products (see Section 3.1). Imports of poultry meat are likely to dominate the picture of growing dependence on imported meat.

Trade in dairy products will also likely recover, with net imports of the developing countries resuming growth after a period of stagnation from the mid-1980s onwards (Table 3.14). This would reflect continuation of the growth of imports of East Asia, as well as the resumption of import growth into the major deficit region, the Near East/North Africa, following recovery in the growth of demand.

Table 3.14: Net trade in meat1 and milk/dairy ('000 tonnes)

1964/66

1974/76

1984/86

1997/99

2015

2030

Type of meat

Developing countries

Bovine

859

706

13

-114

-310

-650

Ovine

52

-29

-229

-259

-700

-1170

Pig meat

90

55

516

-173

-550

-830

Poultry meat

-33

-200

-430

-693

-2340

-3250

Total meat

969

532

-129

-1238

-3900

-5900

Industrial countries

Bovine

-907

-375

370

1491

1860

1840

Ovine

-20

86

372

375

820

1270

Pig meat

-167

-273

25

891

930

1010

Poultry meat

-9

110

314

2624

4320

4800

Total meat

-1103

-452

1080

5380

7930

8920

Transition countries

Bovine

116

-80

-160

-626

-810

-590

Ovine

43

34

-16

12

10

20

Pig meat

207

282

65

-479

-100

100

Poultry meat

44

108

143

-918

-1000

-620

Total meat

409

344

33

-2012

-1900

-1090

Total meat by developing region

Sub-Saharan Africa

111

180

-60

-92

-280

-740

Near East/North Africa

-97

-337

-1437

-1246

-2360

-3520

Latin America and the Caribbean

829

672

867

658

1770

2 770

South Asia

-6

0

47

173

-80

-410

East Asia

132

18

454

-732

-2 950

-4000

Milk and dairy products in whole milk equivalent (excluding butter)

Developing countries

-5300

-8735

-20040

-19848

-29600

-38900

Sub-Saharan Africa

-522

-1206

-2785

-2321

-3600

-5200

Near East/North Africa

-753

-2031

- 757

-4 980

-8 900

-12500

Latin America and the Caribbean

-1879

-2571

-5500

-5374

-6350

-6700

South Asia

-662

-553

-1247

-804

-1200

-1500

East Asia

-1486

-2374

-3751

-6370

-9550

-13000

Industrial countries

6920

8973

18420

19665

28000

35700

Transition countries

135

898

1886

2212

3500

5200

1 Includes the meat equivalent of trade in live animals.

Growth of feed use of cereals will resume. Demand for cereals for feed is projected to grow at 1.9 percent a year between 1997/99 and 2015, and at 1.5 percent p.a. thereafter to 2030. The growth rate of the first subperiod is a little higher than that of livestock production (1.7 and 1.5 percent in the two subperiods, respectively). The projected growth rates of feed demand for cereals are higher than the depressed ones of the historical period, despite the projected slowdown in livestock production (Table 3.11, memo items). The main reasons are as follows:

As noted in the section on cereals, the turnaround of the transition economies and the EU from declines in the preceding decade to renewed growth in feed use of cereals (or at least, the cessation of declines) will lead to resumption of growth of demand for cereals in this sector. This process has been under way in the EU since the early 1990s (INRA, 2001, p. 46). These two regions have a large weight (33 percent) in world cereal feed consumption. Therefore, the continued turnaround will be reflected in higher growth rates of the global demand for feed compared with the past (European Commission, 2001, Table 1.6).

In parallel, the shift in meat production away from bovine meat towards poultry meat will exert a much weaker downward pressure on the demand for feedstuffs than in the past. As shown in Table 3.11, in the past 20 years poultry production increased at 5.1 percent p.a. and bovine meat at 1.2 percent p.a. In the period to 2015, the difference in the growth rates will be much smaller, 2.9 and 1.4 percent, respectively, hence the downward pressure exerted on the aggregate grain-meat conversion rates will also be weaker.

In the developing countries, the growth of cereal use for feed and the growth of livestock production have moved much more in unison than in the industrial countries. If these trends were to continue, the growing weight of the developing countries in world livestock production would imply that the global totals and relationships will increasingly reflect developments in these countries. Will the trends continue? It is likely that, for some time, there will be a tendency for the use of concentrates in total animal feed to increase more quickly than aggregate livestock output in the developing countries. This will reflect the gradual shift of their production from grazing and«backyard» systems to stall-fed systems using concentrate feedstuffs (see Chapter 5). Such structural change in the production systems will tend to raise the average grain-meat ratios of the developing countries and perhaps compensate for opposite trends resulting from improvements in productivity. A strong case for this prospect is made in a recent analysis by the Centre for World Food Studies in the Netherlands (Keyzer, Merbis and Pavel, 2001).

3.4 Oilcrops, vegetable oils and products

3.4.1 Past and present

Fastest growth of all subsectors of global agriculture. The oilcrops sector has been one of the most dynamic parts of world agriculture in recent decades. In the 20 years to 1999 it grew at 4.1 percent p.a. (Table 3.15), compared with an average of 2.1 percent p.a. for all agriculture.26 Its growth rate exceeded even that of livestock products. The major driving force on the demand side has been the growth of food demand in developing countries, mostly in the form of oil but also direct consumption of soybeans, groundnuts, etc. as well as in the form of derived products other than oil.27 Food demand in the developing countries accounted for half the increases in world output of the last two decades, with output measured in oil content equivalent (Table 3.16). China, India and a few other countries represented the bulk of this increase. No doubt, the strong growth of demand for protein products for animal feed was also a major supporting factor in the buoyancy of the oilcrops sector. The rapid growth of this sector reflects the synergy of the two fastest rising components of the demand for food (Table 3.16, lower part): food demand for oils favouring the oil palm and for livestock products favouring soybeans.

Table 3.15: Oilcrops, vegetable oils and products, production and demand

Million tonnes

Growth rates, percentage p.a.

1997/99

1969-99

1979-99

1989-99

1997/99-2015

2015-2030

Aggregate consumption (all uses, oil equivalent)

World

98.3

4.0

3.9

3.7

2.7

2.2

Developing countries

61.8

5.0

4.8

4.6

3.2

2.5

Sub-Saharan Africa

6.7

3.2

3.4

4.3

3.3

3.2

Near East/North Africa

6.2

5.1

4.3

3.2

2.5

2.2

Latin America and the Caribbean

9.0

4.7

3.7

3.2

3.2

2.4

South Asia

13.6

4.5

4.5

4.2

3.5

2.5

East Asia

26.2

6.2

6.1

5.8

3.2

2.3

Industrial countries

30.6

3.2

3.4

3.1

1.7

1.8

Transition countries

6.0

1.1

-0.4

-1.4

1.3

1.4

Production (oilcrops, oil equivalent)

World

103.7

4.1

4.1

4.3

2.5

2.2

Developing countries

67.7

4.8

5.0

4.7

2.8

2.4

Sub-Saharan Africa

6.0

1.5

3.0

3.5

3.2

3.0

Near East/North Africa

1.8

2.0

2.4

2.4

2.3

2.1

Latin America and the Caribbean

14.6

5.7

4.8

5.3

2.9

2.6

South Asia

9.7

3.6

4.6

2.4

3.2

2.4

East Asia

35.5

6.2

5.8

5.5

2.7

2.2

Industrial countries

30.2

3.6

3.1

4.6

1.7

1.7

Transition countries

5.8

0.7

0.9

-0.5

1.3

1.6

Growing contribution to food supplies and food security. World production, consumption and trade in this sector have been increasingly dominated by a small number of crops (soybeans, oil palm, sunflower and rapeseed) and countries. However, the more traditional and less glamorous oilcrops continue to be very important as major elements in the food supply and food security situation in many countries, such as groundnuts and sesame seed in the Sudan and Myanmar, coconuts in the Philippines and Sri Lanka and olive oil in the Mediterranean countries.

Rapid growth of food demand in the developing countries, in conjunction with the high calorie content of oil products, has contributed to the increases achieved in food consumption in developing countries (measured in the national average kcal/person/day, see Chapter 2). In the mid-1970s, consumption of these products (5.3 kg/ person/year, in oil equivalent, Table 3.17) supplied 144 kcal/person/day, or 6.7 percent of the total availability of 2152 calories of the developing countries. By 1997/99 consumption per capita had grown to 9.9 kg contributing 262 kcal to total food supplies, or 9.8 percent of the total, which itself had risen to 2680 kcal. In practice, just over one out of every five calories added to the consumption of the developing countries originated in this group of products. This trend is set to continue and intensify: 44 out of every 100 additional calories in the period to 2030 may come from these products. This reflects the prospect of only modest growth in the direct food consumption of staples (cereals, roots and tubers, etc.) in most developing countries, while non-staples such as vegetable oils still have significant scope for consumption increases.

Non-food uses. The second major driving force on the demand side has been the non-food industrial use of vegetable oils, with China and the EU being major contributors to this growth (Table 3.16). The existing data do not permit us to draw even a partial balance sheet of the non-food industrial products for which significant quantities of vegetable oil products are used as inputs.28 The main industrial products involved (paints, detergents, lubricants, oleochemicals in general) are commodities for which demand can be expected to grow as fast, if not faster, than the demand for food uses of vegetable oil products, particularly in the developing countries. In addition, the rapid demand growth for industrial uses in the EU probably reflects the incentives given in recent years to farmers to grow crops (oilseeds, rape, linseed) for non-food uses on land set aside under the CAP rules for limiting excess production of food crops. There have been serious efforts in several European countries to expand the market for biofuel from rapeseed oil as a substitute for diesel fuel (Koerbitz, 1999, Raneses et al., 1999). This option has been viewed not only as a way out of the impasse of surplus food production but also as a desirable land use for environmental reasons, although the energy efficiency and the net effect on the environment remain to be established (Giampietro, Ulgiati and Pimentel, 1997). In terms of actual oil produced and used (rather than of oil equivalent of oilcrops) the world is apparently using some 24 million tonnes for non-food industrial uses out of a total use of 86 million tonnes. In the mid-1970s the comparable figures were 6 and 33 million tonnes, respectively.

Table 3.16: Sources of increases in world production and consumption of oilcrops (in oil equivalent)

Concentration of growth in a small number of crops and countries. The demand for protein meals for animal feed also contributed to a change in the geographic distribution of oilseeds production. This shifted towards countries that could produce and export oilseeds of high protein content, in which oilmeals are not by-products but rather joint products with oil, e.g. soybeans in South America. In addition, support policies of the EU helped to shift world production of oilseeds in favour of rapeseed and sunflower seed. Overall, four oilcrops, oil palm, soybeans, rapeseed and sunflower seed account for 72 percent of world production. In the mid-1970s they accounted for only 55 percent (Table 3.18). These four crops contributed 82 percent of the aggregate increase in oilcrops production since the mid-1970s (Table 3.16). Moreover, a good part of these increases came from a small number of countries, as shown in the lower part of Table 3.16: palm oil mainly from Malaysia and Indonesia; soybeans from the United States, Brazil, Argentina, China and India; rapeseed from China, the EU, Canada, India and Australia; and sunflower seed from Argentina, the EU, the United States, Eastern Europe, China and India. For many countries, including some major producers, these fast expanding oilseeds are new crops that were hardly cultivated at all, or in only insignificant amounts, 20 or even ten years ago.29

Table 3.18: Major oilcrops, world production

Production of oilcrops in oil equivalent(Million tonnes)

Actual oil production

Growth rates, % p.a.

1964/66

1974/76

1984/86

1997/99

2015

2030

1997/99

1969-99

1979-99

1989-99

1997/99-2015

2015-2030

Soybeans

5.8

10.5

17.2

27.7

42

58

22.5

4.1

3.2

4.5

2.5

2.2

Oil palm

2.1

3.7

8.7

21.6

35

49

21.6

8.2

7.7

6.5

2.8

2.3

Rapeseed

1.7

3.0

7.1

14.5

22

32

11.9

6.9

6.6

5.6

2.4

1.8

Sunflower seed

3.4

4.2

7.5

10.3

15

21

9.3

3.7

3.1

2.3

2.2

2.4

Groundnuts

4.8

5.4

6.1

9.4

15

20

4.8

2.3

3.2

4.1

2.6

2.2

Coconuts

3.1

3.7

4.3

6.0

9

12

3.2

2.3

2.7

2.5

2.4

1.8

Cottonseed

3.4

3.7

5.0

5.3

7

9

3.8

1.6

1.2

0.1

2.0

1.4

Sesame seed

0.7

0.8

1.0

1.2

2

3

0.7

1.5

1.9

2.4

3.0

2.5

Other oilcrops

3.7

4.3

4.8

7.6

10

13

5.1

1.3

1.6

2.7

1.6

1.8

Total

29.0

39.0

62.0

104.0

157

217

83.0

4.1

4.1

4.3

2.5

2.2

Oils from non-oilcrops (maize, rice bran)

2.6

Growing role of trade. The rapid growth of demand in the developing countries was accompanied by the emergence of several countries as major importers, with net imports rising by leaps and bounds. Thus, by the mid-1990s there were ten developing countries, each with net imports of over 0.7 million tonnes (India, China,30 Mexico, Pakistan, etc., see Table 3.20). These ten together now have net imports of 13 million tonnes, a 12-fold increase in the period since the mid-1970s. Numerous other developing countries are smaller net importers, but still account for another 4 million tonnes of net imports, up from small net exports 20 years ago. This group includes a number of countries that turned from net exporters to net importers over this period, e.g. Senegal, Nigeria and Sri Lanka. With these rates of increase of imports, the traditional net trade surplus of the vegetable oils/oilseeds complex (oils, oilmeals and oilseeds) of the developing countries was reduced to zero in both 1999 and 2000, compared with a range of US$1.0-US$4.4 billion in the period 1970-98. This happened despite the spectacular growth of exports of a few developing countries that came to dominate the world export scene, i.e. Malaysia and Indonesia for palm oil and Brazil and Argentina for soybeans. As happened with the livestock sector, the overall evolution of trade of oilseeds and products has contributed to the agricultural trade balance of the developing countries diminishing rapidly and becoming negative (Figure 3.2).

Oilcrops responsible for a good part of agricultural land expansion. On the production side, these four oilcrops expanded mainly, although not exclusively, in land-abundant countries (Brazil, Argentina, Indonesia, Malaysia, the United States and Canada). Particularly notable is the rapid expansion of the share of oil palm products (in terms of oil palm fruit) in Southeast Asia (from 40 percent of world production in 1974/76 to 79 percent in 1997/99) and the dramatically shrinking share of Africa (from 53 to 14 percent). Africa's share in terms of actual production of palm oil (9 percent of the world total - down from 37 percent in the mid-1970s) remained well below that of its share in oil palm fruit production. This denotes the failure to upgrade the processing industry - but also the potential offered by more efficient processing technology to increase oil output from existing oil palm areas. The contrast of these production shares with the shares of land area under oil palm is even starker: Africa still accounts for 44 percent of the world total, three-quarters of it in Nigeria.

The oil palm and the other three fast growing crops (soybeans, rapeseed and sunflower) have been responsible for a good part of the expansion of cultivated land under all crops in the developing countries and the world as a whole. In terms of harvested area,31 land devoted to the main crops (cereals, roots and tubers, pulses, fibres, sugar crops and oilcrops) in the world as a whole expanded by 59 million ha (or 6 percent) since the mid-1970s. A 105-million ha increase in the developing countries was accompanied by a 46-million ha decline in the industrial countries and the transition economies. The expansion of land under the four major oilcrops (soybeans, sunflower, rape and oil palm) was 63 million ha, that is, these four crops accounted for all the increase in world harvested area and more than compensated for the drastic declines in the area under cereals in the industrial countries and the transition economies (Table 3.19). In these countries, the expansion of oilseed area (25 million ha) substituted and compensated for part of the deep decline in the area sown to cereals. But in the developing countries, it seems likely that it was predominantly new land that came under cultivation, as land under the other crops also increased.

These numbers clearly demonstrate the revolutionary changes in cropping patterns that occurred, particularly in the developed countries, as a result of policies (e.g. the EU support to oilseeds) and of changing demand patterns towards oils for food in the developing countries and oilcakes/meals for livestock feeding everywhere. They also demonstrate that land expansion still can play an important role in the growth of crop production. The 200 percent increase in oilcrop output between 1974/76 and 1997/99 in developing countries was brought about by a 70 percent (50 million ha) expansion of land under these crops, at the same time as land under their other crops also increased by an almost equal amount (Table 3.19).

Table 3.19: Harvested area increases: main oilseeds versus other main crops

Developing countries

Rest of world

1974/76

1997/99

Change

1974/76

1997/99

Change

Main crops

Million ha

Cereals

406

441

35

306

242

-63

Roots and tubers

33

40

7

15

11

-4

Pulses

53

60

7

10

9

-1

Sugar beet and cane

12

20

7

9

7

-2

Fibre crops

30

28

-2

9

9

0

Oilcrops

70

120

50

38

63

25

Total above

603

708

105

387

342

-46

of which:

Soybeans

15.6

38.9

23.3

22.2

31.0

8.8

United States

20.8

28.6

7.8

Brazil

5.8

12.6

6.8

China

7.0

8.3

1.3

Argentina

0.4

7.2

6.8

India

0.1

6.1

6.0

Sunflower

2.4

7.8

5.4

7.0

13.3

6.3

EU (15)

0.7

2.2

1.5

Former Soviet Union

4.4

6.8

2.4

Eastern Europe

1.1

2.2

India

0.3

1.8

1.5

Argentina

1.2

3.5

2.3

Rapeseed

6.5

14.3

7.7

2.6

11.5

8.9

China

2.2

6.6

4.4

India

3.5

6.7

3.2

Canada

1.3

5.3

4.0

EU (15)

0.8

3.1

2.3

Oil palm

3.5

9.0

5.4

Malaysia

0.4

2.6

2.2

Indonesia

0.1

1.8

1.6

Nigeria

2.1

3.0

0.9

Groundnuts

18.6

22.5

3.9

1.0

0.7

-0.2

India

7.1

7.2

0.1

China

1.8

4.0

2.2

Nigeria

1.3

2.5

1.2

Sudan

0.8

1.5

0.6

Senegal

1.3

0.7

-0.5

Indonesia

0.4

0.6

0.2

United States

0.6

0.6

0.0

Note: In this table, cotton is included in fibre crops and not in oilcrops.

23 The poverty projections of the World Bank (see Chapter 2), suggest that despite the expected rapid decline in poverty in China, the country may still have some 200 million persons in the«under US$2 a day» poverty line (source as given in Table 2.5). 24 The latest global food projections study of IFPRI projects China's per capita meat consumption to reach 64.4 kg in 2020 (Rosegrant et al., 2001, p. 131). A higher estimate of 71 kg in 2020 is used in another IFPRI study (Delgado, Rosegrant and Meijer, 2001, Table 7). FAPRI, starting from the radical downward revisions of the historical meat production/consumption data (which bring the consumption per capita to 31 kg in 1997/99), projects 41 kg in 2011. 25 Long-term historical series (1909-2000) of meat consumption in the United States can be found in www.ers.usda.gov/Data/FoodConsumption/Spreadsheets/mtpcc26 For the derivation of the growth rates of the entire oilcrops sector, the different crops are added together with weights equal to their oil content. This is what the expression«oil equivalent», used in this study, means. 27 For example, in China it is estimated that out of total domestic consumption of soybeans (production plus net imports) of about 15 million tonnes, only about nine million tonnes are crushed for oil and meal and the balance is consumed as food directly or in other forms (Crook, 1998, Table 8.1).28 One should be careful with these numbers as this category of demand is often used by statisticians as the dumping ground for unexplained residuals of domestic disappearance and statistical discrepancies. There is no doubt, however, that non-food industrial uses are a dynamic element of demand. 29 For example, soybeans in India and even Argentina, sunflower seed in China, Pakistan, Brazil, Myanmar, oil palm in Thailand, rapeseed in the United States and Australia. 30 It is believed that China's net imports of vegetable oils are much larger than reported in the trade statistics because of considerable smuggling
(1.5-2.0 million tonnes, OECD, 1999, p. 18).31 The increase of harvested area implies not only expansion of the cultivated land in a physical sense (elsewhere in this report referred to as arable area) but also expansion of the land under multiple cropping (in the harvested or sown area definition, a hectare of arable land is counted as two if it is cropped twice in a year). Therefore, the harvested area expansion under the different crops discussed here could overstate the extent to which physical area in cultivation has increased. This overstatement is likely to be more pronounced for cereals (where the arable area has probably declined even in the developing countries) than for oilcrops, as the latter include also tree crops (oil and coconut palms and olive trees).